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Columnists

Embrace innovation instead of fighting it

While business is changing, we are not changing to meet the emerging realities. Good business people know that to succeed in this competitive world, one must be innovative, proactive and willing to take risks.

These very simple attributes elude many entrepreneurs who only come to realize their importance when their business is no longer relevant in the market.

Most Kenyans can remember a pager. It was used by mostly by doctors who used to receive a one-way sms-like message.

At its peak, it was hyped as one of the most innovative communication channels. The advent of the mobile telephony wiped it out of service into oblivion.

At some point, we had cassettes that were storage devices for music as well as film. Innovations brought the CD and DVD. These innovations are on their way out to give room to online streaming platforms like Netflix, Spotify and iTunes etc.

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Sony has lived through these innovation tremors. Hundreds of companies have closed shop for failing to predict the direction their business was taking.

Kodak engineer Steve Sason was the first person to come up with the concept of the digital camera in 1975, but the company executives were not proactive enough in its implementation.

They were afraid that it would kill their film business in which they had invested heavily.

That simple mistake became their biggest nightmare when smaller and nimble companies went ahead to implement the concept and disrupted the entire industry.

The Digital Age is here with us and it will continue to cause havoc in virtually all enterprises. Internet penetration in Kenya stands at 50 per cent, but it is already causing unprecedented changes.

It has brought down geographic barriers such that I do not have to be in New York to work there. I can co-create with someone in Australia without ever meeting the person in person.

Internet will build economies and bring down others in equal measures. The Internet economy is estimated to be about $4.2 trillion. Yet its free trade is under threat from many governments and it worried global leaders at the recent Davos talks.

The fear is coming from increasing innovations such as WhatsApp, Viber, Telegram, Facebook, and Skype to mention but a few that threaten telecommunications revenue.

We shall be undermining innovation and progress if we halt new applications by protecting existing businesses that are not even solving the problems tackled by the new technologies.

The enterprises that are seeking protection from new innovations were themselves creations of innovation. History tells us that threats to business resulted into new innovations.

When US rail companies attempted to blackmail John Rockefeller into accepting higher transportation cost of his kerosene, he built his own pipeline.

Another threat to Rockefeller came in form of electricity, which he suspected would kill his kerosene monopoly status and perhaps render him obsolete.

He quickly invested in research and came up with gasoline to power motor vehicles. To date we are using gasoline to power vehicles.

Similarly, telecommunication companies should not hide behind regulatory authorities to frustrate innovation but rather think like Rockefeller and find another avenue for revenue creation. To join them when you can’t beat them is a time-honoured maxim.

The future of voice in the telecommunications industry is uncertain. They should put more resources into building new innovations that will propel them beyond the emerging crisis.

They can even take the risk of forging alliances with their tormenters or decide to create their own ecosystem that includes banking and broadcasting.

There are emerging signs that the supermarkets too as they exist today may not be there in the days to come. WalMart, the world’s largest retailer is closing down several of its stores because online platforms are taking away their business.

In Kenya, there is a chance that Jumia, the online store, and similar platforms, will pose a serious threat to all the current retailers.

There are also an increasing number of online groceries making home deliveries that will soon complicate mama mboga as well as retail businesses. This too can become part of the telecommunications ecosystem.

Success of future businesses in this ever-changing world depends on the level of risk, the new innovations and the speed at which you implement new creations.

Those enterprises that fail to take note of these qualities will pay the ultimate price, that is, death, just like many have died in the cases I have referred to here.

Theodore Roosevelt, the 26th US President, said: ‘‘No man is worth his salt who is not ready at all times to risk his well-being, to risk his body, to risk his life, in a great cause.’’

The writer is an associate professor at University of Nairobi’s Business School.

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